Various scenarios were discussed at a mostly cordial briefing Tuesday night on how proposals to create or expand public hospital districts may or may not affect future revenues of Fire District 2, which covers Central Park, Montesano, Brady and parts of the Wishkah and Satsop River Valleys.
That’s because Fire District 2 could end up in one of two public hospital districts or none, depending on what voters decide. And levy revenues could be affected, or not, depending on how it goes.
Most questioners among the 40 people in attendance concentrated on Grays Harbor Community Hospital’s capital debt and a possible levy that may or may not happen if Fire District 2 is absorbed into a proposed Hospital District 2 or annexed into Hospital District 1.
Representatives from Hospital District 2’s Grays Harbor Community Hospital and Hospital District 1’s Summit Pacific Medical Center were on hand to answer questions.
Scenario 1: Fire District 2 will be absorbed entirely into the proposed new Hospital District 2 if voters approve it in the primary election Aug. 5. Voters will then send a slate of candidates for seven commissioner slots, who will be elected in November. Then, and only then, will the elected board decide whether a levy is needed to help fill coffers or to act as collateral for some $37 million in capital debt.
“We don’t even know if we will need it,” said Grays Harbor Community Hospital’s CEO Tom Jensen of a levy increase, reminding the audience that decision is up to the elected commissioners if the district is approved. “It’s not up to me.”
The situation was created after Grays Harbor Community Hospital asked the Legislature to pay 125 percent in state and federal Medicaid money to help it cover costs for people unable to pay. On its way to passage, the bill was amended to require that a public hospital district be created.
The hospital would receive an additional $3 million a year from state and federal funds, Jensen said, which would cover an estimated $2.6 million in annual red ink. It would move from being a non-profit to a public-owned hospital governed by the new commissioners.
If the levy is authorized by the new commissioners, it could raise up to $1 million in additional revenue, Jensen estimated.
“None of this would have happened if the state would have authorized additional money,” said Aberdeen Police Chief Bob Torgerson, who is also a candidate for an at-large commissioner position. He did not speak at the meeting but came there to listen, he said later. He would not say how he would vote on a possible levy, but said it would likely be less than 50 cents per $1,000 in assessed value, due to legal limits.
Grays Harbor Community Hospital is the only Level 3 trauma center in the county. If the measure is defeated, the current board may decide to drop service gradually down to Level 4 or 5, meaning serious emergencies, surgeries and middle of the night cases would be sent to Olympia or Centralia, Jensen said.
Doctors and other personnel then might leave the Harbor, public relations representative David Quigg said. Many retired or left because they did not want to serve indigent patients or those on Medicaid, he noted later.
The proposed Hospital District 2 runs from Montesano and Brady to the east, all the way to North Beach, north to the county line, and south to the county line.
Scenario 2: Much of Fire District 2 could be annexed by Hospital District 1, if the voters defeat Hospital District 2. Hospital District 1, which encompasses Summit Pacific Medical Center in Elma, will likely ask voters in November to allow them to annex more western territory, including Montesano and Brady. The border would stretch north to the county line and south below Melbourne.
If voters approve that annexation, then property owners, including those in Fire District 2, would pay the existing Hospital District 1 levy of 50 cents per $1,000 in assessed value. A sliver of the fire district would remain outside of the hospital district but property owners will still have to pay the hospital levy, Fire District 2 Chief Leonard Johnson said.
That levy amount currently brings in $470,000 per year which covers about 11 days of the center’s operations, said Summit’s CEO Renee Jensen, who is married to Tom Jensen.
Previous plans made for expansion were brought forward by the board of five commissioners, Jensen said. The measure received favorable public comment and is up for a final vote next week.
Summit’s Chief Financial Officer Will Callicoat and Jensen said plans include expansion of primary care services into the new annexed area.
Scenario 3: With a $5.90 cap on local services, there are only so many slices of pie to go around and every government services wants as much as needed to deliver essential services.
Each government entity is “hungry” for a slice of the pie.
Johnson used a white board and handouts to talk about how much of a slice the fire districts get and how hospital districts may or may not affect whether he has to raise the levy slightly, or ask either hospital district for so-called buyback money to make up the difference.
Johnson called the meeting to prepare ground, in case he needs to explain the need to raise levy a few years down the line.
Lawyers for the fire district have been working with both districts to make sure the fire district is reimbursed if extra levy money is needed through the “buyback” procedure, the explanation of which was so dense it provoked laughter among the audience.
Johnson later said it has taken him years to understand the levy process.
Consequences: The board of fire commissioners called for a cordial meeting and largely got what they wanted, though a few questions and observations were pointed.
How could the community hospital have gone into such debt? asked one man.
Jensen likened those payments to paying off a mortgage and said many hospital districts have chose this method of financing capital improvements because the interest rates are better. The bonds funded recent improvements to the hospital.
One woman, who is a retiring from Virginia Mason, worried about possible loss of services provided by Grays Harbor Community. Someone else wondered whether Jensen had tried to sell the hospital.
Yes, he said, but they couldn’t get the price and today, “it is not as attractive.”
“There is no way” the hospital can continue to provide Level 3 services if the additional state and federal funding is not found Jensen noted. The hospital would likely have to cut services at the birthing center and around the clock surgeries. Many more patients would have to travel to Olympia for trauma and serious emergency care. The hospital has 100 of 140 beds in operation.
Summit’s medical center has 15 beds and does not deliver acute care, Renee Jensen said. The hospital and medical center “complement” each other,” she said.
A woman shouted out, “are you rooting for (Hospital District 2) to fail?” Jensen shook her head, no.
“Home is … interesting,” the other Jensen joked.
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